Most people assume that, once you’ve filed for personal bankruptcy, the process cannot be halted.
There are numerous reasons why you might want to annul an undischarged bankruptcy using a consumer proposal, such as:
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You receive a large sum of money
Under the laws governing bankruptcies, if you receive a large sum of money before the bankruptcy is discharged, it will be seized and distributed amongst your creditors.
If you are expecting to come into money, such as an inheritance, you may want to annul your bankruptcy with a consumer proposal to ensure you can retain ownership of the funds when they come to you.
Your income increases
Personal bankruptcy is affected by ‘surplus income’ rules, which means that your bankruptcy payments will increase if your income exceeds the surplus income threshold.
However, this rule is not applicable to consumer proposals.
If you find out you’re going to get a raise, for example, annulling your bankruptcy with a consumer proposal will mean that your monthly payments won’t increase as a result of your subsequent increase in income.
Assets are deemed non-exempt
If you own assets that you believe are exempt from bankruptcy but later find out they are not, it could make sense to file a consumer proposal instead.
Non-exempt assets can be seized during the course of a bankruptcy but filing a consumer proposal instead allows you to retain ownership of all of your assets.
How to Annual a Bankruptcy
You can only annul a bankruptcy before it’s discharged, so you may need to act quickly in order to achieve your goal.
It’s also important to note that using a consumer proposal to annul a bankruptcy will mean that you can only include debts which were in existence when the bankruptcy was filed.
If you have incurred more debt since filing for bankruptcy, these additional debts cannot be included in your consumer proposal.
Fortunately, annulling an undischarged bankruptcy with a consumer proposal isn’t as complicated as you might think.
As both bankruptcies and consumer proposals must be dealt with by licensed insolvency trustees (LITs), you will already be in touch with a regulated professional who can help you to file the relevant paperwork.
Ideally, you will work closely with your trustee prior to filing any type of insolvency to determine what type of debt relief is right for you.
However, unexpected financial or lifestyle changes can mean that it’s more sensible to switch to another debt solution.
If so, your licensed insolvency trustee will explain what the changes will mean for your financial situation and provide all the information you need.
If you have an undischarged bankruptcy or if you’re thinking about filing for bankruptcy or making a consumer proposal, talk to a trustee today.
At Bankruptcy Canada, we’ve helped over 100,000 people overcome debt problems and we can help you too.
Contact us now on (877) 879-4770.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
Consumer Proposal Eligibility
How to Amend a Consumer Proposal
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?